THE Xi Yang case has raised grave questions about Beijing's policy on the control of information, the politicised justice system and the stepped-up campaign of intimidation against the Hong Kong media. Since the Ming Pao journalist's detention on September 27 last year, the authorities have never supplied evidence to support the claim that Xi had stolen and made roundabout inquiries about state financial secrets. There is little doubt, however, that the Beijing court could, in time-honoured Chinese fashion, justify the incrimination and even the 12-year jail term. The key is what constitutes ''state secrets'', one of the murkiest concepts in a very muddled legal framework. The State Secret Law stipulates that anything having to do with ''state security and interests'' constitutes a state secret, leaving the authorities with arbitrary powers of interpretation. In practice, the administration's definition of ''state secrets'', like those regarding ''counter-revolutionary crimes'', ''anti-government activities'' and other aspects of security, is based on war-time considerations of the 1930s and 40s, when the fledgling Chinese Communist Party (CCP) was under threat of extinction through persecution by the Kuomintang and the warlords. Many in the party are aware these concepts have long become obsolete. However, it serves the administration's purpose to retain the archaic institutions. In the age of computers and mass media, knowledge is power. And the CCP is convinced that the less they let the people know about reality - particularly its seamier aspects - the more secure its hold on power. Thus, things every Chinese has a right to know - ranging from the health of patriarch Deng Xiaoping to the shady business deals of the offspring of senior cadres - are ''state secrets''. The system also provides the administration with a handy weapon to penalise foreign and Hong Kong journalists who might have got hold of information that is too close to the truth. The Xi incident is also disturbing because it provides yet another illustration of the politicisation of the judicial process. It is an open ''state secret'' that for major cases, it was not the courts but the party Central Committee's Political and Legal Commission, the Politburo Standing Committee, and sometimes Mr Deng, who made the decision about guilt and the kind of punishment to be meted out. It was the patriarch who dictated the jail term of dissident Wei Jingsheng as well as that of the principal secretary of ousted party chief Zhao Ziyang, Bao Tong, one of whose alleged crimes was ''leaking state secrets''. Mr Deng and politburo heavyweights including Premier Li Peng had the final say over the treatment accorded the two ''black hands'' in the 1989 democracy movement, Wang Juntao and Chen Ziming. Before the court cases on the two opened, Mr Li had said in internal meetings ''the party cannot let the tigers go back to the hills''. General Secretary Jiang Zemin personally looked into the circumstances of the ''leaking'' of his political report to the 14th Party Congress in October 1992. Xinhua (the New China News Agency) editor Wu Shishen, who allegedly supplied the document to Hong Kong reporter Leung Wai-man, was given a life sentence last year. Sources said because the ''state secrets'' Xi allegedly published in Ming Pao were based on an internal address made last summer by Vice-Premier Zhu Rongji to the People's Bank of China (PBOC), Zhu was among several heavyweight politicians who laid down instructions that the Hong Kong journalist and his ''informant'', PBOC clerk Tian Ye, be mercilessly dealt with. Only the politicised nature of Chinese justice could explain the shockingly stiff punishment slapped on Xi and Tian, who got 15 years last week. Wei was given a 15-year term in 1979 - when China was still recovering from the lawlessness of the Cultural Revolution - for allegedly obtaining military secrets. Bao, who was charged with leaking Politburo decisions to the student ''rebels'' at Tiananmen Square, got seven years. The ''state secrets'' Xi was found guilty of ''stealing'' were reportedly confidential documents concerning Beijing's plans for interest rate changes and its policy on international gold transactions. According to the better connected among Western bankers and brokers in Beijing and Shanghai, similar ''state secrets'' are bandied about on a daily basis in fancy karaoke bars in the coastal cities. The severity of Xi's punishment is also obvious when one looks at the dozens of Western, Asian and Taiwan journalists who were caught pilfering ''state secrets'' or engaging in ''anti-government activities'' since the early 80s. They were either given warnings or kicked out of the country after brief periods of detention. None received jail terms. There is no escaping the conclusion that, as Ming Pao, the Hong Kong Journalists Association, and other press and human rights watchdogs have pointed out, the Xi case is a deliberate attempt by the CCP to gag the Hong Kong press. With the growing accessibility of satellite and Hong Kong television and other forms of broadcasts, news reported by Western and local reporters is available to a fast-growing Chinese audience. Because of language, culture and connections, Hong Kong reporters have an edge over their Western and Asian colleagues in obtaining ''state secrets''. Even more important is the 1997 factor. At a time when China is engaged in psychological warfare with Britain over the hearts and minds of Hong Kong, it is in Beijing's interest to ensure that, to use a Chinese axiom, the guns of the Hong Kong media are pointed in the right direction. After 1997, much of the Hong Kong media will become domestic Chinese media. Beijing's ideologues and censors are at a loss about policing hundreds of irreverent, muck-raking Hong Kong newsmen. Beijing's campaign of intimidation against the Hong Kong press began, of course, well before the June 4, 1989, crackdown in Tiananmen Square. And quite a few local media have already exercised ponderous self-restraint. The Xi case shows Beijing is not contented with self-censorship: what it wants may be total control. In a wider context, the Xi affair exposes not only the CCP's dubious desire of honouring the ''one country, two systems'' formula but its pledge to loosen its grip over the courts and the media. More than the preferential terms offered foreign investors, a developing country's track record in press freedom is the best gauge of its commitment to modernisation. China, along with North Korea, is among the few countries in the world still bent on ''killing the messenger with unwelcome tidings''. Because of language, culture and connections, Hong Kong reporters have an edge in obtaining ''state secrets''